What’s Really Going On!

“So many assume. So little know.” 

We all tend to think because we live and breathe our chosen professions that everybody must know exactly what is going on. 

Real estate is no exception. 

And assumptions happen on both ends: clients have assumptions about what it’s like to be an agent and how the process of buying or selling a home works. 

I’m here to tell you the truth. 

Right now, a common assumption is that if you are buying a home, you will need to give away your firstborn in order to make your offer stand out.  

A little dramatic? Yes. But being in the trenches with my buyers, this seems so true at times! 

What’s Really Going on in Today’s Real Estate Market

It comes down to a simple explanation: supply and demand. 

In a free market, price determination is derived from the real demand for a product. As Realtor.com’s senior economist George Ratiu explains, 

“Real estate fundamentals remain entangled in a lattice of continuing demand, tight supply, and disciplined financial underwriting.” 

In plain English, we have more qualified and ready buyers than homes available. There aren’t enough houses to sell, and those who have been qualified to buy a home with historically low interest rates are now going through extensive processes – via their lender – to ensure that the affordability is there. 

This puts the buyers, agent, and lender in a little bit of a pickle. 

3 Pieces of Advice for Buyers in Today’s Market

Today’s market is gnarly, and at times, unforgiving. But that doesn’t mean it’s hopeless. Here are three things to remember if you plan on buying a home this year:

1) It isn’t always about going above the asking price.

In 2007, the housing market took a nose dive due to a combination of rising home prices, loose lending practices (if you had a pulse, you got approved to buy), and an increase in subprime mortgages. 

Prior to the housing market crash, there are infamous stories of agents writing up offers in the trunk of their cars without contingencies, such as a home inspection and an appraisal. 

Now, I know you are thinking – this can’t be happening now. 

Yes, it is happening now. We are coming full circle to the days of writing up offers that are at least 25% above asking price, forgoing home inspections and appraisals just to compete. 

One stark contrast is that the lenders have tightened up their game. No more loosey-goosey practices. Lenders are doing everything they can possible to ensure the borrower can and will be in good standing. 

As a buyer, make your offer strong, but make sure your agent is an advocate for you. Work with someone who will let you know when foregoing an inspection and appraisal is safe, and when it could come back to haunt you.  

The disappointment of not getting an offer accepted will diminish but having regret will last forever. 

2) Be clear in what to expect and how to avoid pitfalls.

There is a solid step-by-step process in purchasing a home. I correlate it to baking, as baking is a science. It needs the right measurement of each ingredient and you cannot miss a step or your cake will look and taste like a dirty sock. (I may have personal experience in failing epically while trying to bake.)

From having a solid pre-approval from a reputable lender, to having proof of your down payment and knowing exactly how and when the closing will occur – these steps are essential in making your offer stand out. 

Furthermore, know going in that there will be disappointment. 

Your dream home may go to someone else. 

But, here’s the thing about dream homes: 

Inevitably there will be another. I promise you.

The pitfalls I see buyers getting into is the emotional attachment cycle. You see a home. You fall

in love with the home. You make an offer on the home. You don’t get the home and you are

devastated, angry and disappointed. You want to blame someone. 

These feelings are that, just feelings. I always advise my clients that feelings are fleeting but having a goal isn’t. 

Our goal is to find your dream home. And as a team, we will find it! 

3) Take breathers.

There will be multiple offers placed, which means there will be multiple rejections. 

My rule is that if we put in three offers and they do not get accepted, I tell my clients to take a step back for a week.

Don’t think about real estate and focus on something completely different. More often than

not, the week will provide a much-needed reprieve. We are able to redirect our energy into what’s to come versus dwell on what didn’t happen.

Remember, at the end of the day there really isn’t a true emergency in Real Estate. Unless the home is literally burning to the ground, there are no emergencies. Does an offer need to get into the Seller’s agent within a certain period? Absolutely.

But if all the expectations are set forth in the beginning, the process becomes more fluid and with a little bit of luck, we are able to find that home.

YOUR HOME!

Do you have questions about buying in today’s market?